9 Factors that Drive the Real Estate Market

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Many people are realizing the possibilities of money that can be made by investing in Canadian real estate. Investing in real estate is one of the modern ways of making money, but you need to know what you are doing to avoid losing money. Some people make this their occupation and others dabble in it from time to time.

To succeed as a real estate investor you must understand the factors that drive the real estate market in your area. Here is a few points to consider:
 

1- Mortgage interest rates
Low interest rates allow a greater proportion of renters to become homeowners, which in turn can lead to an increase in home sales and therefore push prices higher.

2- Increase in disposable incomes
This is one of the most important indicators. If a town’s average disposable income is increasing faster than the national average real estate prices are poised to do the same thing. Key indicators include: increased average income, decreasing income tax rates, and increasing retail sales. Be wary of towns where demand is driving values upward while the average income is remaining flat. Check out the housing affordability index for the area. As a rule of thumb a well-balanced market for investors is a market that has a housing affordability index of about 33%.

3. Increased job growth and incoming migration
It pays to read the newspaper regularly in the towns you invest in. Be on the lookout for announcements of new jobs, major expansions, or new employers moving in. Find areas where the population is growing faster than the provincial average and gaining a good reputation. Also look at immigration – people from other countries moving into the area, and intra-migration – people moving from other parts of Canada into the area.

4.The real estate Doppler effect
It is often much more profitable to invest in areas surrounding the boom than to buy property in the heart of it. Use this factor to identify areas that are poised for a strong increase in demands. Smaller cities, outside of areas that get the effect, usually take 6 months to catch up. Look for towns where redevelopment is occurring. Older untouched neighbourhoods in these areas can sometimes be hidden gems that aren’t immediately affected by a boom.

5. Regional political climate
Business friendly politicians generally promotes real estate friendly investment environment. Look for regions where development is encouraged, not shunned. Look for areas with forward-looking economic development offices where they sell the area to potential employers. Progressive towns attract business while other towns lose it.

6. The economy
Another key factor that affects the value of real estate is the overall health of the economy. This is generally measured by economic indicators such as the GDP, employment data, manufacturing activity, the prices of goods, etc. Broadly speaking, when the economy is sluggish, so is real estate.  A positive economic condition can make the confidence of the buyers and investors high. An inactive economy will result in devaluation of the market prices of properties.

7. Critical infrastructure expansion
Here’s another reason why reading local newspapers in areas that you plan to invest in will pay off when considering buying property in certain areas.  Look for planes, trains, highways, sewers, land annexation or expansion plans.  But remember, never buy based on rumours alone.  Trains and rapid transport are huge (i.e., towers that spring up at subway stops).  Buy within 800 meters of the station, or exit/entrance, etc.

8. Change of zoning regulation
Sophisticated investors look first at properties physical attributes, and then they examine how they may be able to change the property to optimize profit way beyond just renovations.  For example, an old hotel that is converted into loft apartments, taking a single family home and converting it to a duplex.  You need to know zoning bylaws and tenant regulations to make the transition successful. A small percentage of properties will have this potential, but make sure you have the required finances and expertise before taking this on, or find a purchasing partner.

9. Seasonal factors
Real estate prices are either high or low in some particular months in a year. Different seasons mean changing real estate sales. Therefore, prices of particular types of recreational properties or residential homes change depending on the season.

Basement Waterproofing Technologies - keep your basement dry!

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Basement leakage is the most common problem found in houses, and over 90% of all basements will leak and suffer damage at one time or another. Some evidence of moisture penetration can be found in almost every house. A house with water problems does not necessarily mean it was poorly constructed. Water can appear in even the best built home.

Moisture problems can be intermittent. In some houses, water penetration will occur after virtually every rainfall. In other houses, it will occur only after periods of prolonged rain. In most cases however, the resultant damage gives no indication of frequency.

Not all basement leakage problems are solvable, but the majority of leakage problems can be solved by directing surface water away from the building regarding around the foundation or/and using downspout extension to force rainwater to flow away from the house.

Warning signs of water leakage:

• Mold and mildew: Fungus that grows in damp and dark areas, and causes discoloration, or musty odors.
• Musty odors: This could be the result of the decay process from mold, and dry rot.
• Peeling paint
• Damp spots on walls: Water has absorbed through your walls.
• White substance on basement walls: This is a chemical breakdown of the bonding agent that holds your walls together. The white substance is a sign of possible structural deterioration.
• Cracked walls: Should be inspected to determine the exact cause.
• Rust on appliances, furniture or furnaces.
• Dry rot: Black fungus grows mostly on walls or wooden surfaces, causing wood to decay.

Why is waterproofing important?
A wet basement can dramatically reduce the value of your home. Studies show that most people won't even consider buying a home with water leakage. Selling a home with water leaks can easily result in as much as a 25% reduction in the sale price.

Even if you rarely have problems with dampness or flooding, it's best to solve the problem completely before doing any remodeling work. Permanent solutions can take time to implement. A good place to start is to talk to an independent home inspector who specializes in waterproofing problems.

Damp proofing or water proofing on walls?
There is a big difference between damp proofing and waterproofing. By definition, damp proofing can retard moisture but, unlike waterproofing, it does not stop hydrostatic water pressure.

To damp proof, you apply a coat of tar-based material to the outside walls. Tar damp proofing is inexpensive and meets the lowest minimum standard.

Damp proofing may be acceptable if there is a sandy soil and great drainage. But often, there is a high water table or poor soil. Clay holds rainwater, which builds up hydrostatic pressure against the foundation. Moreover, water cannot drain through the undisturbed soil under the footings and groundwater level rises.

Complete waterproofing is ideal
Good waterproofing is a wise investment. It is not just a coating but a whole system that includes:

1- Redirects water away from the foundation
The various exterior waterproofing barriers have varying levels of effectiveness in protecting the outside wall areas. But wall anti-leaking barriers do not affect water penetration due to water accumulation at the footer or floor level. The ideal solution to this problem lies in directing the accumulation of water away from the foundation or into drainage or pumping systems.

2- Install an interior drainage systemTo control leakage in the basement, you may want to install a drainage system on the inner side of the foundation. The floor is broken up along the perimeter of the basement wall and drain tile is placed in a trench that carries the water to a discharge point, or sump pump, which takes the water away from the house.

3- Apply waterproofing compounds to the walls
With mild or occasional capillary seepage, capillary waterproofing materials can be applied to either exterior or interior wall and floor surfaces. If properly applied, they will penetrate several inches into concrete and close off minor cracks by forming crystals in the presence of water. You should carefully read the product label to determine if the product waterproofing limitations is sufficient to fix the problem. Waterproofing paint is most effective if applied directly over cement and not to existing painted walls.

January Sales Stats and Average Home Prices for K-W

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KITCHENER-WATERLOO, ON (Feb 2, 2018) –– There were 270 residential sales in January through the Multiple Listing System (MLS® System) of the Kitchener-Waterloo Association of REALTORS® (KWAR), a decrease of 18 per cent compared to January 2017.


"On the surface, activity appears to be somewhat sluggish in January, says Troy Schmidt, KWAR President. "However if we set aside the past two years, it was a very typical January in terms of the number of sales. What is less typical is that listing inventory is still at historic low levels, and we continue to see multiple offers on properties putting upward pressure on prices."

Total residential sales in January included 149 detached (down 23.6 per cent), and 70 condominium units (down 11.4 per cent) which includes any property regardless of style (i.e. semis, townhomes, apartment, detached etc.). Sales also included 27 semi-detached homes (down 18.2 per cent) and 22 freehold townhouses (up 10 per cent).

The average sale price of all residential properties sold in January increased 9 per cent to $458,750 compared to January 2017. Detached homes sold for an average price of $554,857 an increase of 10.7 per cent compared to January of last year. During this same period, the average sale price for an apartment style condominium was $246,821 for an increase of 4 per cent. Townhomes and semis sold for an average of $371,095 (up 14.5 per cent) and $388,974 (up 9.7 per cent) respectively.

The median price of all residential properties sold last month increased 6.8 per cent to $431,143, and the median price of a detached home during the same period increased 4.2 per cent to $495,000.

"While the tougher mortgage rules that came into play on Jan. 1 have sidelined some homebuyers, the reality is we’re still experiencing more demand than supply right now," says Schmidt.

REALTORS® listed 486 residential properties in K-W and area last month, an increase of 10.45 per cent compared to January of 2017. The number of active residential listings on the KWAR’s MLS® System to the end of January totalled 588, which is 56 per cent more than January of last year, but still well below the previous ten-year average of 1507 listings for January. Months of inventory continues to track at a low 2 months.

The average days it took to sell a home in January was 32 days, compared to 23 days in January 2017.

While the majority of MLS® System activity is properties for sale, REALTORS® also represented landlords and tenants in 51 residential leases in January, an 18.6 per cent increase compared to January 2017.

Schmidt says, "There is no question that the expansion of the stress test on mortgages is going to be hard on consumers. For those entering the market, the stress test combined with higher borrowing costs is going to push some buyers out of their desired market. Some homebuyers will be looking to other areas, and more affordable housing types, which is a vicious circle. For some home hunters, Waterloo region is still seen as one of the more affordable markets."

5 Great Home Improvements to Consider

Some home improvements cost more than they're worth. Before you get started on that home improvement project, take a moment to consider its potential return. To help you understand which projects offer the highest returns, we used the recent Remodeling Cost vs. Value Report to compile a list of the 5 top home improvement projects for your money.

Each year, Remodeling magazine's Cost vs. Value Report provides a fascinating look at the percentage of a home improvement project's costs that are likely to be recouped at resale. The report finds that not all home remodeling jobs are created equal—you'll probably get better return on your investment back after building a wooden deck, for example, than adding a sunroom.

1. Entry door replacement. Homeowners who install a steel front door recoup nearly 129% of the project's cost when they sell their home, according to the report. The reason being a steel door is less expensive than the alternatives. A fiberglass front door replacement project, for example, costs about three times more than a steel door replacement. But a steel door can still be attractive enough to boost your home's curb appeal and makes a big first impression on somebody who is looking at the house.

2. Minor kitchen remodel.  Most people consider the kitchen to be the heart of the home, and because of this, updates in this room pay off. According to the report, you can expect to recoup between 60%-120% of your investment on a kitchen remodel, as long as you don’t go overboard. You should never make your kitchen fancier than the rest of the house, or the neighbourhood.

3. Attic bedroom. Converting that dusty old attic into a functional bedroom recoups on average about 83% of the project's cost when you sell your home, according to the report. At around $49,000 the bedroom addition is certainly more expensive than replacing your front door. But when it comes to adding new livable space to your home, building an attic bedroom is often easier on your budget than, a family room addition, for example, which can run around $85,000.

4. Wood deck addition. The addition of a wooden deck to your property gives nearly 81% of the project's cost when you sell your home. The wooden deck's appeal is linked to today's more thrift-conscious consumers, who are looking to save money by spending more time at home. Since they are staying home they want to enjoy their exterior space so adding a deck is one of those areas that can add value. Like a steel door, the popularity of wooden decks is also associated with costs. A similar project built from composite materials can run you about 50% more.

5. Old windows replacement recoup on average about 77% of the project's cost. This makes your home more attractive while increasing its energy efficiency. Also, certain window replacements can qualify for federal tax credits. Start by replacing windows that are beaten up or broken and consider the project's energy efficiency benefits the icing on the cake.

Contatct me today for a Free Home Value Report or for answers to any of your real estate questions at www.kimlouie.net!

A Year (2017) in the Canadian Housing Market

 

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Housing market trends continue to diverge considerably among regions along four general themes: British Columbia; the Greater Golden Horseshoe; oil and natural resource dependent provinces; and everywhere else.

In Ontario, housing market sentiment has sidelined more buyers than was previously anticipated following changes to provincial housing policies aimed at reining in housing markets in the Greater Golden Horseshoe region announced in April. Activity has begun to show tentative signs of stabilizing among markets in the region but is down sharply since March amid a rapid shift in housing market balance and increased cautiousness among homebuyers. Because the region is home to a quarter of the Canadian population, changes in sales activity there has a large influence on results for the province and nationally.

In British Columbia, activity appears to be stabilizing somewhere in between the highs of early 2016 and the lows of late 2016 and early 2017. Meanwhile, sales activity is still running at lower levels while supply remains elevated in the natural resource-intensive provinces of Alberta, Saskatchewan, and Newfoundland and Labrador. This has resulted in somewhat softer price trends in the two western provinces and more pronounced price declines in Newfoundland and Labrador.

To varying degrees, housing markets in Manitoba, Northern and Eastern Ontario, Quebec, New Brunswick, Nova Scotia and Prince Edward Island had a breakout year in 2016, with rising sales drawing down previously elevated levels of supply. Inventories in these regions have continued to decline this year.

 

Ontario - GTA REALTORS® Release November Stats

Toronto - December 5, 2017 -- Toronto Real Estate Board President Tim Syrianos announced that Greater Toronto Area REALTORS® reported 7,374 transactions through TREB's MLS® System in November 2017. This result was up compared to October 2017, bucking the regular seasonal trend. On a year-over-year basis, sales were down by 13.3% compared to November 2016.

New listings entered into TREB's MLS® System in November 2017 amounted to 14,349 – up by 37.2% compared to November 2016, when the supply of listings was very low from a historical perspective.

"We have seen an uptick in demand for ownership housing in the GTA this fall, over and above the regular seasonal trend. Similar to the Greater Vancouver experience, the impact of the Ontario Fair Housing Plan and particularly the foreign buyer tax may be starting to wane. On top of this, it is also possible that the upcoming changes to mortgage lending guidelines, which come into effect in January, have prompted some households to speed up their home buying decision," said Mr. Syrianos.

The MLS® Home Price Index (HPI) composite benchmark price was up by 8.4% on a year-over-year basis in November 2017. The average selling price for all home types combined was down by two% compared to November 2016, due in large part to a smaller share of detached home sales versus last year. On a year-to-date basis, the average selling price was up by 13.4% compared to the same period last year. High-density home types continued to lead the way in terms of price growth, with the average condominium apartment price up by double-digits compared to November 2016.

"Changes in market conditions have not been uniform across market segments. In line with insights from consumer polling undertaken by Ipsos in the spring, we are still seeing seller's market conditions for townhouses and condominium apartments in many neighbourhoods versus more balanced market conditions for detached and semi-detached houses. We will have more insights to share about consumer intentions for 2018 at the end of January when TREB releases its third annual Market Year in Review and Outlook report," said Jason Mercer, TREB's Director of Market Analysis.

Ottawa, December 5, 2017 -- Members of the Ottawa Real Estate Board sold 1,239 residential properties in November through the Board’s Multiple Listing Service® System compared with 992 in November 2016, an increase of 24.9%. The five-year average for November sales is 1,001.

“November numbers are upholding the robust year we have been experiencing in the real estate market in 2017,” Rick Eisert, President of the Ottawa Real Estate Boards states. “Both residential sales and condo sales continue to steadily increase.”

November’s sales included 294 in the condominium property class and 945 in the residential property class. “This is not surprising though,” Eisert remarks. “The Office of the Superintendent of Financial Institution’s (OSFI) announcement regarding the new stress tests for low- ratio borrowers may have buyers rushing into the market before the stricter mortgage regulations come into play in January 2018. If this keeps up, I expect December could be a busier than usual holiday season for REALTORS®.”

The average sale price of a residential-class property sold in November in the Ottawa area was $418,354, an increase of 3.2% over November 2016. The average sale price for a condominium-class property was $257,212, a decrease of 7.6% over November 2016. The Board cautions that the average sale price can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The calculation of the average sale price is based on the total dollar volume of all properties sold. Price and conditions will vary from neighbourhood to neighbourhood.

“It is crucial in a market that is moving quickly, such as the one we are experiencing, to ensure you are pricing your property correctly. Having the guidance and market knowledge of a REALTOR® is essential for home buyers and home sellers,” suggests Eisert.

“The most active price point in the residential market is the $300,000 to $450,000 range, accounting for 46% of the market. While the most active price point in the condo market, between $150,000 and $275,000, accounts for 66% of the market,” says Eisert. “In addition to residential and condominium sales, OREB Members assisted clients with renting 2,821 properties since the beginning of the year.”

 

British Columbia  - Metro Vancouver continues to experience above-average demand and below-average supply

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 2,795 in November 2017, a 26.2% increase from the 2,214 sales recorded in November 2016, and a 7.5% decrease compared to October 2017 when 3,022 homes sold.

Last month’s sales were 17% above the 10-year November sales average.

“We’re seeing steady demand in today’s market. Home buyer activity is operating above our long-term averages, particularly in our townhome and condominium markets,” Jill Oudil, REBGV president said.

There were 4,109 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in November 2017. This represents a 30.6% increase compared to the 3,147 homes listed in November 2016 and a 9.5% decrease compared to October 2017 when 4,539 homes were listed.

The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 8,747, a 4.3% increase compared to November 2016 (8,385) and a 4.3% decrease compared to October 2017 (9,137).

“While we’re seeing more listings enter the market today than we saw at this time last year, we have a long way to go before our home listing inventory rises back to more historically typical levels,” Oudil said.

The sales-to-active-listings ratio for November 2017 is 32%, which is up three% since September 2017. By property type, the ratio is 15.9% for detached homes (up one% since September 2017), 36.4% for townhomes (down six% since September 2017), and 67.8% for condominiums (up seven% since September 2017).

Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12% mark for a sustained period, while home prices often experience upward pressure when it surpasses 20% over several months.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,046,900. This represents a 14% increase over November 2016 and a 0.4% increase compared to October 2017.

Sales of detached properties in November 2017 reached 841, a 31.8% increase from the 638 detached sales recorded in November 2016. The benchmark price for detached properties is $1,608,000. This represents a 6.1% increase from November 2016 and a 0.1% decrease compared to October 2017.

Sales of apartment properties reached 1,508 in November 2017, a 25.7% increase compared to the 1,200 sales in November 2016. The benchmark price of an apartment property is $648,200. This represents a 23.9% increase from November 2016 and a one% increase compared to October 2017.

Attached property sales in November 2017 totalled 446, an 18.6% increase compared to the 376 sales in November 2016. The benchmark price of an attached unit is $805,200. This represents a 17.9% increase from November 2016 and a 0.3% increase compared to October 2017.